El Paso Pipeline Partners (EPB) announced third-quarter 2014 operating earnings of 31 cents per unit, lagging the year-ago earnings and the Zacks Consensus Estimate of 40 cents by 22.5%.
The partnership’s earnings in the third quarter 2014 were adversely affected by two rate case settlements that resulted in lower rates on the Southern Natural Gas (SNG) and Wyoming Interstate Company (WIC) pipelines and also lower rates on contract renewals on WIC.
Total Revenues
Total revenues in the third quarter were $352 million, down 4.6% from $369 million in the year-ago period. Quarterly revenues were 14.3% below the Zacks Consensus Estimate of $411 million.
Highlights of the Release
The partnership’s operating and maintenance costs for the quarter were $61 million, a 10.3% decline from the prior-year quarter. However, this did not benefit the operating margin as depreciation and amortization expenses climbed nearly 8.2% year over year to $53 million.
In spite of in line expenses, the decline in total revenues affected the operating income of the partnership. Operating income declined 6.6% year over year to $198 million.
During the reported quarter, transported volumes per day were 8,798 billion British thermal units (BBtu), nearly 9.6% higher than the volumes transported in the prior-year quarter.
The partnership announced a cash distribution of 65 cents per common unit for the third quarter, which reflected a year-over-year hike of 12.1%.
2014 Forecast
El Paso Pipeline Partners reaffirmed its 2014 cash distribution of $2.60 per unit, a 2% increase from the 2013 disbursement level.
On Aug 10, 2014, Kinder Morgan, Inc. (KMI) announced that it will acquire all publicly held shares/units of Kinder Morgan Energy Partners (KMP), Kinder Morgan Management, and El Paso Pipeline Partners in an approximately $70 billion transaction. The transaction is expected to close before year end.
Upcoming Peer Release
Delek Logistics (DKL) is expected to release its third quarter results on Nov 4, 2014. The Zacks Consensus Estimate for the quarter is 72 cents.
Zacks Rank
El Paso Pipeline Partners currently has a Zacks Rank #3 (Hold).
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